JackpotJoy extends non-compete with Gamesys

The company formerly called Intertain has announced an extended non-compete agreement with Gamesys, the vendor of the JackpotJoy business, which will mean the previous owners will not be able to enter the B2C-focused bingo space until at least April 2019.

The news came on the same day that the newly-renamed JackpotJoy announced that it was on track to complete the switch both in its name and in its listing home from Toronto to London. Its current market cap is equivalent to circa £430m.

Talking to analysts in London this week, new chairman Neil Goulden said it was important to clarify what the company actually owned. “We own the brands, we own the player database and we have the option to internalise the staff,” he said.

Chief executive Andy McIver similarly moved to point out that JackpotJoy owned the “intellectual property”. He added that the new agreement gave the company the option to end the platform agreement as of April 2019

Under the terms of the new non-compete, the new covenant now stretches out to April 2019 from the original date of April next year. The two companies have also signed an extension to their platform deal to April 2030 from 2025. The licensing agreement now comes to an end in 2040. A new platform deal has been agreed totalling £24m to be paid monthly in arrears between April 2017 and April 2020.

As part of the new agreement, a £150m earnout pre-payment will be paid by February next year. The maximum earnout will now be capped at £375m.

Intertain bought JackpotJoy in early in 2015 for an initial fee of £425.8m. At the time of the deal, Gamesys founder Noel Hayden joined the Intertain board, but he is not on the newly-reconstituted JackpotJoy board.

Also speaking at the investor day was Lee Fenton, the chief executive at Gamesys, and he confirmed that the company had no intention of moving back into the B2C bingo-led gaming space. “We said before we had no intention of re-entering the B2C market once again and we repeat that,” he said. “Our focus as a business remains on JackpotJoy, working with JackpotJoy plc, making sure we are growing this business.”

He added that Gamesys was now concentrating on pushing ahead with its Virgin Games offering. “Virgin is a big growth opportunity for us,” he said. “The market segment is the Vegas end of the market. It’s a much more male demographic, and is a very different play. We are going to invest heavily in that proposition.”

Rumours have suggested Gamesys will be entering the sports-betting space, and Fenton confirmed that following the agreement with Metric Gaming it was exploring the prospect. “For sports, we are taking a look at whether we can be effective there,” he said. “We have a long way to go.”

JackpotJoy hopes to list in London in late September or early October. McIver was keen to emphasise that the combination of the JackpotJoy, Starspins, Botemania, Vera & John and the Costa brands presented a market-leading proposition across the UK, Sweden, Spain and other jurisdictions. In the six months to June, the company made revenues of C$247.3m and an adjusted EBITDA of C$98.5m.

The company opted for a London listing after failing to find a buyer for the business earlier in the year, despite a number of expressions of interest. McIver implied today that the failure to find a buyer had come down to an issue of valuation when he said the company was now lo longer pursuing a sale. “If an offer makes a lot of sense economically, or offers an enormous amount of cash, then we will consider it,” he said. “But it is not a strategy we are actively pursuing.”

Totally Gaming Says: The move to London will help re-establish the JackpotJoy business in a market where it makes the majority of its earnings and where the actual business and the staff have their roots. The extended non-compete – and Fenton’s comments - will help soothe nerves about who owns what with JackpotJoy, but the strengths of the Vera & Jon and Costa brands shouldn’t be ignored.